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Market Brief, North America

28 Sep 2023

Up and away

Another round of stronger-than-expected US activity data combined with surging oil prices to send Treasury yields roaring to new cyclical peaks yesterday, triggering yet another spike in the dollar. Durable goods orders surprised with a 0.2-percent gain in August – markets had expected a -0.5 percent contraction – and non-defence capital spending climbed 0.9 percent, suggesting that the business investment cycle remained in relatively robust health. West Texas Intermediate prices briefly jumped above the $95 mark after the Energy Information Administration said crude inventories at the Cushing, Oklahoma delivery hub fell to less than 22 million barrels, nearing tank bottoms...

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27 Sep 2023

Bonds have more fun

Treasury yields are retreating from multi-decade highs, helping relieve pressure on equity and foreign exchange markets. North American stock markets look set to open in the green and the dollar is putting in a mixed performance, but the risk-sensitive Canadian dollar is inching lower, and background volatility measures are creeping up. Bond yields moved higher in yesterday’s session after home prices resumed their rise, with the S&P CoreLogic Case-Shiller 20-city index climbing for a fifth month in July – a development that could indicate financial conditions are still too loose, and one that suggests inflation might remain sticky for longer....

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26 Sep 2023

Dollar juggernaut maintains momentum

Ten-year Treasury yields are holding near the highest levels since 2007, and the dollar is close to a nine-month peak Defensive buying ahead of the looming US government shutdown may be playing a role, but the Swiss franc, Japanese yen, and gold – traditional safe haven instruments – are showing limited signs of demand. Instead, we think hawkish interpretations of last week’s dot plot and press conference remain in play – which marks a contrast with the earlier part of the year, when markets repeatedly faded Jerome Powell’s “higher for longer” message. A number of factors may have led to...

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25 Sep 2023

Markets turn negative as threat environment worsens

Markets are back on the warpath this morning, pushing Treasury yields and the dollar toward cyclical peaks. The US ten-year is holding near 16-year highs, the trade-weighted greenback is at its strongest levels in six months, risk-sensitive currencies are retreating, and global oil benchmarks keep pushing toward the $100 per barrel mark. Two major factors are bolstering the US exceptionalism trade: strong domestic demand numbers are forcing investors to capitulate in the face of the Federal Reserve’s higher-for-longer mantra, and risk-reward ratios in other currencies are worsening as soaring oil prices threaten to raise costs in the major energy importing regions. And...

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22 Sep 2023

US exceptionalism trade regains momentum

A bruising week for global Wall Street continues this morning, with the dollar holding steady and major indices paring gains into the North American open. Ten-year Treasury yields are inching slightly lower after climbing to a 16-year high in yesterday’s session, paying more than 4.5 percent at one point. The moves came after the Federal Reserve on Wednesday issued forecasts showing rate cuts happening at a slower and more incremental pace than markets had previously anticipated, and after another weekly claims report beat expectations, suggesting that labour markets remain far from cooling. The number of initial applications for unemployment benefits fell...

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